Tuesday, 16 June 2020

Sweeping changes to VAT Act could give advertisers a break

TL;DR

What We’re Tracking Today

So we’re heading into the longest day of the year in the northern hemisphere this coming Saturday, 20 June. That’s gotta count for something, right? Some symbolic suggestion that the worst of 2020 — the year that just keeps on giving — may slowly start to recede? Maybe?

Today’s must-read interview: Our sitdown with EBRD regional boss Heike Harmgart in Spotlight, just after Speed Round.

Now, to put you in the right frame of mind for this morning’s issue: This is one of the best visualizations we’ve seen of leading global causes of death in January-May 2020. As we’ve said before: It’s not that lots of people are dying of covid-19. It’s that they’re dying all at once.

How are the markets looking? Asian shares opened sharply in the green this morning and futures point to a strong open in both Europe and the United States later today after US shares staged a strong comeback yesterday.


COVID-19 IN EGYPT-

We set a new single-day record for deaths and infections yesterday, as the Health Ministry confirmed 97 new deaths from covid-19 and 1,691 new infections. The country’s total death toll is now at 1,672 and the total number of confirmed cases is at 46,289. We now have a total of 13,732 confirmed cases that have since tested negative for the virus after being hospitalized or isolated, of whom 12,329 have fully recovered.

Drive-thru covid-19 testing on university campuses by the end of the week: The Health Ministry and Speed Medical will be offering RT-PCR tests for the virus that causes covid-19 at drive-thru facilities at Ain Shams, Cairo University, 6 October University and Future University starting Thursday, according to Ahram Online. Tests can be booked in advance through an app where users can also check their results.

Ain Shams University has fully equipped a 200-bed field hospital to treat patients that will start operations this Thursday, according to a cabinet statement. The news comes as some 786 apartments in public housing have been designated as temporary quarantine facilities in Minya and Fayoum, Housing Minister Assem El-Gazzar said in a ministry statement.

A number of private-sector pharma companies have been given the green light to manufacture vitamin C, zinc and food supplements in response to what the National Food Safety Authority says is a “severe supply shortage” amid surging consumer demand, Al Mal reports.

We’re buying everything we can online: Valu, EFG Hermes’ consumer finance arm, has seen online purchases skyrocket during the pandemic to exceed 50% of total volumes, up from 22% prior to the outbreak, company CEO Mohamed El Feky said.

National flag carrier EgyptAir is seeking a EGP 3 bn loan from the National Bank of Egypt after having lost some EGP 3 bn and fallen into the red since the suspension of flights in March, Aviation Minister Mohamed Manar told talkshow maven Lamees El Hadidy. The airline lined up an EGP 2 bn lifeline from the state back in May to fund obligations. EgyptAir will slowly resume scheduled commercial flights in July.

France will finance Egypt’s acquisition of EUR 15 mn worth of medical equipment and protective gear, the International Cooperation Ministry said in a statement.

enterprise

ON THE GLOBAL FRONT-

Covid-19 vaccine may not prevent spread, but could greatly improve survival rates: Expedited attempts to develop a vaccine may result in a product that prevents death, but not necessarily infection, Bloomberg suggests. “Desperation for a way to keep economies … could mean settling for a vaccine that prevents people from getting really sick or dying but doesn’t stop them from catching the coronavirus.”

Considering a little jaunt to Europe when Egyptian airspace starts reopening in July? Look for updates here on which countries are allowing in visitors, from where, and under which conditions. The commission has also launched Re-Open EU to advise travellers on the status of border restrictions across the Shengen zone. Euronews has a good rundown on the state of play as of yesterday.

But you may not need to travel as much for business going forward, the Wall Street Journal contends, writing that execs are “rethinking multiday trips and plan for less travel” in favour of video conferences. CEOs in the US of A are down with the shift, the Journal writes.

SIGN OF THE TIMES- “Some of Qatar’s biggest state-owned companies have cut their wage bills as part of a wider government plan to reduce spending and bolster finances to mitigate the impact of the coronavirus outbreak,” Bloomberg reports.

AND THE REST OF THE WORLD-

BP will cut up to USD 17.5 bn from the value of its assets in its 2Q2020 earnings after lowering its longer-term oil and gas price assumptions amid the pandemic, which it expects will speed the transition away from fossil fuels, a company statement said on Monday. The energy giant revised its price assumptions for benchmark Brent crude oil to an average of USD 55 per barrel for 2021-2050. The new prices are revised down around 30% from previous assumptions, a company official told Reuters. The Financial Times and Bloomberg covered the report.

The top headline in the business press on both sides of the Atlantic this morning: The US Supreme Court has ruled that LGBTQ workers cannot be discriminated in the workplace as they are covered under federal human rights laws. The FT, NYT and WSJ are all leading with the story at dispatch time this morning, while Reuters notes that the decision yesterday sets up another legal battle as SCOTUS is now set to take up “another major legal fight over the scope of religious-rights exemptions to certain federal laws that could dilute the landmark decision’s impact.”

Was Carlos actually set up? Top Nissan execs who objected to celebrity CEO Carlos Ghosn’s plan to accelerate integration with Renault started plotting to “dethrone one of the most celebrated leaders in the automotive industry … almost a year before Ghosn’s arrest in late 2018 for alleged financial misconduct,” Bloomberg reports.

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YouTube Music and YouTube Premium are now available in Egypt: YouTube has launched its music streaming app, YouTube Music, in Egypt for a monthly subscription fee of EGP 49.99, according to a press release (pdf). YouTube Premium is also launching at a monthly fee of EGP 59.99 where subscribers get streaming without ads, background play, offline access, as well as a subscription to YouTube Music. The platform also offers a family plan for up to five members at a monthly rate of EGP 89.99.

Enterprise+: Last Night’s Talk Shows

The latest developments in Egypt’s negotiations with Ethiopia and Sudan on the Grand Ethiopian Renaissance Dam were once again the main talking point on the airwaves. Al Kahera Alaan’s Lamees El Hadidi (watch, runtime: 03:33) and El Hekaya’s Amr Adib (watch, runtime: 2:52) both took note of the story, which we also cover in this morning’s Diplomacy + Foreign Trade, below.

Sporting activities are making a (gradual) comeback: The Youth and Sports Ministry has decided to allow sporting clubs to gradually resume sporting activities and training as of 1 July, leading with non-contact sports such as tennis, golf, archery, and weightlifting. Sports with “medium” levels of contact (including rowing, hockey, and volleyball, among others) and contact sports that take place in enclosed spaces, such as squash, judo, taekwondo, and handball, will be allowed to begin training on 1 July and resume competitions on 1 August. Minister Ashraf Sobhi phoned in to Masaa DMC (watch, runtime: 7:04) and Al Kahera Alaan (watch, runtime: 10:56) to explain the ministry’s plan to safely resume these activities.

Speed Round

Speed Round is presented in association with

SMART POLICY- Most commercial advertising will be subject to value-added tax under sweeping amendments to the VAT Act that the Finance Ministry finalized yesterday and posted to its website (pdf). In a move sure to be welcomed by advertisers and media organizations alike, the amendments would (if passed) also lift the 20% stamp tax on advertisements. Direct advertising and merchandising were previously exempt from VAT and subject to stamp duties on the overall size per transaction.

Departing tourists would be able to claim VAT rebates on select items worth more than EGP 1.5k or more in a move that retailers should cheer; the executive regulations of the current act had previously outlined a system that would have allowed VAT drawbacks to start at an EGP 5k threshold.

Baked snacks, soap, and cleaning products would become subject to VAT, instead of a 5% “table” or “schedule” tax.

Businesses will need to file their VAT returns online every month. VAT currently needs to be remitted to the state’s coffers within 60 days of an invoice being issued, payment being received or a good / service being delivered, whichever is earlier.

The proposed changes would also afford special economic zones the same VAT treatment freezones receive. Businesses in special economic zones, including those in the Suez Canal Economic Zone (SCZone), would not be required to remit VAT for any goods or services they purchase or export. The move is part of a drive to give incentives to businesses that want to set up shop in SEZs, the ministry said in a statement. This comes a day after we reported that officials from the SCZone are working with the government to introduce incentives through separate legislative amendments to the law governing such dedicated zones.

Health Ministry allowed to exempt pharma components from VAT where it sees fit: The changes would also allow the health minister to issue decrees exempting raw materials used in the manufacturing of pharma products from VAT. This comes after a decree last July exempting 58 active ingredients and components used for medications. Pharma manufacturers are already granted VAT exemptions on active ingredients used in their products under the original 2016 legislation.

No VAT on blood collection, vaccines, contraceptives: Another change would exempt sellers of antibodies, vaccines, blood plasma and blood collection bags, and birth control devices and contraceptives from charging and remitting VAT in a change that has “covid-19” written all over it.

Other tweaks to VAT exemptions: Construction and maintenance works for places of worship, blended edible oils, and accessible vehicles would also be exempt from VAT. Those goods and services could still be subject to excise or “table” duties that can be either lower or higher than the VAT rate.

Other elements of the proposed changes:

  • Paper makers would be exempt from VAT on their raw materials in a bid to boost the industry. We noted this earlier this year;
  • Violators would incur higher fees and under more broadly stated circumstances;
  • Water bills would no longer incur an extra charge from VAT levied on sewage treatment;
  • International ferry operators would be exempt from VAT.

Where do we stand on the bill? The ministry published the proposals yesterday to invite public feedback. Once those wrap up, a bill should make its way to the House of Representatives for a discussion and vote. As was previously anticipated, the changes would leave the current 14% VAT rate unchanged.

Plan to widen the VAT tax base: Finance Minister Mohamed Maait told us in January that his ministry is aiming to increase the number of taxpayers to 550k from 70k through the proposed changes. This is planned to be done by “tighter” practices that will look to prevent businesses from understating the value of their transactions in VAT returns. Besides removing a ceiling on VAT law violation fees that would allow authorities to impose higher penalties, it’s still unclear how the draft changes are more stringent.

Bottom line: On first glance, this is a very smart, pro-business set of amendments.

enterprise

EU decides to go after Jushi, Hengshi Egypt in China trade probe: The European Commission has imposed anti-dumping duties on glass fibre fabrics as it continues to countervail alleged “market-distorting aid” by the Chinese and Egyptian governments to subsidiaries of Chinese state-owned companies that sell fibreglass fabrics to Europe out of Egypt, Bloomberg says. The decision applies to product originating from China or Egypt. The probe is the first time the EU has penalizes a government (China) that gives aid to subsidiaries of national companies located offshore.

The duties target companies affiliated with China National Building Material Group, including Jushi Egypt and Hengshi Egypt Fiberglass Fabrics. The decision follows other import duties the EU imposed on Egypt- and China-made fibreglass as part of a separate probe by the commission into the same class of products and also concerning Jushi and Hengshi.

EU officials said the companies receive subsidies and direct aid from China and Egypt. This undercuts European producers, namely Finnish company Ahlstrom-Munksjö. European glass-fiber manufacturers have claimed to have suffered “material injury” due to what they described as trade-distorting incentives, including an exemption from value-added tax and import tariffs. Egypt’s share of the European market for glass fiber reinforcements almost tripled to 14% between 2016 and 2018 while China’s share fell to 5% from 8%.

LEGISLATION WATCH- We’re officially getting a Senate again: The House of Representatives’ general assembly signed off yesterday on a bill constituting the Senate as an upper house of parliament, according to Youm7, which has the full text of the bill. The law, which now requires presidential ratification to legally come into effect, will set up a 300-member chamber. One third of the members will be elected through a list system, one third will be elected on an individual basis, and the remaining 100 members will be appointed by the presidency. The bill sets a 10% quota for women in the Senate. Members will be reappointed or elected once every five years.

So, what’s the Senate going to be responsible for? Under the law, the Senate will “give its opinion” on proposed amendments to the constitution and all laws that are supplementary to the constitution, as well as all pacts or agreements related to sovereign rights. The upper house of parliament will also weigh in on the government’s plans for economic and social development, and any other matters the president refers to the Senate that are related to the state’s general policies or its policies on external issues.

Also approved yesterday: A USD 50 mn loan EBRD loan to support the Suez Oil Processing Company’s (SOPC) transition to greater energy efficiency, according to Al Mal. The financing agreement will see SOPC repay the loan in semi annual installments over the course of 13.5 years, following a three-year grace period.

M&A WATCH- EFG Hermes, GB Capital to close Tokio Marine majority stake acquisition before the month is out: A consortium of EFG Hermes and GB Auto’s non-banking financial services arms will complete the purchase of 75% Tokio Marine Egypt Family Takaful in 2Q2020, which ends on 30 June, EFG Finance CEO Walid Hassouna said, according to Masrawy. The EGP 84.75 mn transaction will give each of EFG Finance and GB Capital a 37.5% stake in the life insurance company.

The acquisition plays into EFG’s goal of consolidating its gains as the country’s leading non-banking financial services outfit, Hassouna said at a roundtable for media. EFG currently offers a number of consumer finance products (ValU), e-payments (PayTabs), and microfinance (Tanmeyah), as well as other services including leasing and factoring. The region’s leading investment bank plans to see non-banking financial services accounting for 50% of its profits by the end of 2021. Non-bank services accounted for 25% of revenues in 2019.

A mortgage finance arm in partnership with GB Capital will be up and running in 3Q2020, Hassouna said, according to Hapi Journal. The company, Bedaya, is a partership between GB Capital, EFG and Talaat Moustafa Group and will be led by Tarek Abou Gendia. Hassouna said in December that the company has hired a management team and set up two headquarters in east Cairo and Sheikh Zayed.

EBRD to provide NBE with USD 100 mn for on-lending to SMEs impacted by covid-19: The European Bank for Reconstruction and Development (EBRD) has agreed to provide the National Bank of Egypt (NBE) USD 100 mn for on-lending to SMEs hurt by covid-19, NBE Deputy Chairman Yehia Aboul Fotouh tells Masrawy. The EBRD had approved last week a separate USD 100 mn funding agreement for the National Bank of Kuwait Egypt to onlend to the private sector.

MIH signs agreement with int’l automaker to assemble 30k cars per annum at El Nasr Automotive: The state-owned Metallurgical Industries Holding Company (MIH) has signed a preliminary agreement with an undisclosed international company to locally assemble 30k cars annually at El Nasr Automotive, with manufacturing set to begin within three years, MIH board chairman Medhat Nafeh told Youm7.

Agreement on EV manufacturing coming: Nadeh said that there are plans to sign another agreement with an unnamed Chinese company to locally assemble electric vehicles. Our money is on this being Dongfeng, which has been in negotiations with El Nasr to produce EVs since last year. El Nasr began preparing a feasibility study to manufacture 25k electric cars in partnership with the Wuhan-based company ahead of an agreement that was expected to be signed in 2Q2020. The covid-19 pandemic delayed talks, which restarted in March.

EARNINGS WATCH- Sodic reported a net profit of EGP 28 mn in 1Q2020, down from EGP 161 mn in 1Q2019. Revenues came in at EGP 429 mn from EGP 941 mn in the first quarter of 2019. Low interest income following 750 basis points worth of rate cuts by the central bank since January 2019, along with lower revenues due to a lower number of deliveries, weighed on the company’s bottom line, it said in its earnings release (pdf). “Lockdowns and mobility restrictions decrease the urgency for customers to come in for handovers,” Managing Director Magued Sherif said. The upmarket real estate developer disbursed EGP 5 mn so far for donations and initiatives to support efforts against covid-19 and has redirected its marketing resources to support the cause, Sherif noted.

Looking forward: “We are lucky to operate in a sector with very strong local demand fundamentals and we continue to believe in the long-term drivers of growth in our market,” Sherif added in a note to the earnings that’s worth reading in full. “We are looking [at] … a challenging but rewarding year ahead as we continue to invest in our brand and ensure we distinguish ourselves in this market.”

Egypt Kuwait Holding (EKH) posted a net profit of USD 40.7 mn in 1Q2020, up 15% from USD 37.5 mn a year earlier, according to the company’s earnings release (pdf). Revenues increased by nearly USD 20 mn y-o-y to reach USD 160.9 mn. Growth came primarily from the company’s energy and energy-related segment, which saw revenues rise an “impressive” 46% y-o-y to USD 51.8 mn.

Looking forward: EKH is “optimistic” in the long run about its long-term growth prospects, and expects to see “an overall positive performance” in 2Q2020 despite the second quarter of the year typically being a low season for its businesses, Chairman Moataz Al Alfi says. The company also expects to maintain its growth momentum despite pressure from the covid-19 pandemic, particularly after managing to “buck the prevailing downtrend across all businesses” due to the crisis.

B Investment’s consolidated net profits after tax were up 6.2% y-o-y in 1Q2020 to EGP 37.7 mn, from EGP 35.5 mn in 1Q2019, the company said in a regulatory filing (pdf). The company’s revenues for the quarter increased 8% y-o-y to EGP 54.2 mn, from EGP 50.2 mn in the first quarter of last year.

Orascom Investment Holding reported a net loss of EGP 425.2 mn in 2019 after making a EGP 865 mn profit the previous year, according to the company’s financial statements (pdf). Revenues fell 12% to EGP 1.17 bn during the year from EGP 1.33 bn in 2018. “Going forward the covid-19 outbreak may negatively impact amongst others our supply chain, workforce, operations, demand of our end markets and liquidity,” the statement said. “Based on our current knowledge and available information, we do not expect covid-19 to have an impact on our ability to continue as a going concern in the foreseeable future.”

Raya Holding for Financial Investments reported losses of EGP 69 mn during 1Q2020, after making a EGP 26 mn loss during the same period last year, according to the company’s quarterly financials (pdf). Revenues during the period rose slightly to EGP 2.4 bn, compared to EGP 2 bn last year.

MOVES- Current COO Ahmed El Hoshy will become CEO of Netherlands-based nitrogen and methanol giant OCI NV while Hassan Badrawi will take responsibility for the company’s M&A activities in addition to his role as CFO. The moves come as founder Nassef Sawiris becomes executive chairman of the board, letting go of the CEO post, the company said in a statement (pdf). Michael Bennett will become the new non-executive co-chairman and senior independent director, while Sipko Schat has been named vice chairman of the board. All changes are effective starting 1 August 2020. A further change will be made later in the year with the arrival of Bart Voet as VP of manufacturing in 3Q2020.

MOVES- Ahmed Mohamed Galal appointed for second term as Export Development Bank deputy chairman: Prime Minister Moustafa Madbouly has renewed Ahmed Mohamed Galal’s position as the deputy chairman of the Export Development Bank of Egypt for a second three-year term, according to an EGX disclosure (ppf). Galal was previously the director of corporate and SMEs banking at Piraeus Bank Egypt.

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Spotlight

As alarms have sounded that we’re heading into the deepest global recession of the modern era, Egypt has been (just barely) exempt from the (long) list of countries the IMF and other international organizations think will see their economies contract this year. The European Bank for Reconstruction and Development (EBRD) is no exception — its latest Regional Economic Prospects report sees Egypt doing better than any other country in the region this year, and achieving growth rates second only to Lebanon in 2021.

We sat down with Heike Harmgart, the EBRD’s managing director for the southern and eastern Mediterranean (SEMED) region to discuss Egypt’s post-covid economy, what policymakers can do to stimulate growth, and the EBRD’s investment plans. Edited excerpts from our conversation:

Enterprise: What do you think Egypt needs to do to maintain the relatively positive economic outlook, and what should happen for us to exceed expectations?

Heike Harmgart: Egypt will be severely affected by the covid-19 outbreak, as is the case with all countries we assess. This really shows how interconnected our world is. Egypt has entered the pandemic crisis from a point of strength, after achieving high economic growth in 2019, and it is the only country in the MENA region that will not endure a recession in 2020. We think Egypt will then rebound quite sharply in 2021. That outlook shows the success of the already-enacted macroeconomic reforms and the resilience of the Egyptian economy.

Now, policymakers need to think about how to ensure that you end up in the best possible scenario at the end of this crisis. But the catch is that all scenarios are globally interdependent, so how Egypt or any other single country will perform economically will depend significantly on what other countries are doing, even with the best individual response in place.

For example, some scenarios we've been running had different assumptions for tourism, which is a very important sector for Egypt. Obviously, tourism rebounding in spring 2021 would be much better than recovery in summer or fall 2021. But tourism recovery depends on a number of global factors, including how testing is incorporated in the travel process, and the policies set in place by the countries from which tourists are coming to Egypt. At what point will they reopen their borders and have global or bilateral agreements to resume tourism? The sector will take time to recover regardless, but a key policy to pursue is setting high-quality hygiene standards at hotels and tourism sites, and extensive testing and tracing. That’s the only thing Egypt can do itself.

Other key contributors to Egypt’s economy that unfortunately isn’t under the control of politicians are remittances and revenues from the Suez Canal, which have been hard hit. We do hope that global trade will resume strongly, and even if some global value chains become shorter, the Suez Canal will remain one of the most vital trade routes globally.

Egypt needs to focus now on continuing to ensure that the health system can cope with the health part of the crisis. There are other countries that have struggled immensely, and the cost is paid by both the affected and the healthy parts of the population. So I think that the key here is testing, testing, testing, and contact tracing, followed by quarantine.

We also believe it’s critical to make sure that domestic investment and domestic demand remains strong. The Central Bank of Egypt has been giving banks liquidity to on-lend to SMEs, and government investments in vital infrastructure will form the base for a more resilient and faster economic rebound.

From a legislative perspective, anything that gives the private sector more oxygen and space to breathe would be helpful in this crisis. The initial phase of recovery will require significant dependence on the private sector, so it is important at this time to ensure that the sector is resilient and can innovate. This is not the time to over-regulate or make processes like license applications cumbersome — this is a golden window to reduce bureaucracy and ensure that domestic investment can be maintained in these difficult times. This doesn’t just apply to Egypt; it’s a global phenomenon and all countries should look at how to simplify doing business.

One way to do that is to make business more digitally enabled. This is a huge opportunity for Egypt that shouldn’t be neglected. Many locally grown startups can be brought on to help with this transition. There's a huge upside there, and it would be a huge loss if we come out the other end with the same amount of bureaucracy.

E: What policies or reforms would you like to see the government enacting to improve the business climate, both now and a little further down the line?

HH: One thing that Egypt has done incredibly well in the past is embarking on a path to a green transition. There have been a few heat waves over the past weeks — this shows the excellent level of radiation for solar energy. Investments in solar and renewable energy are really paying off now, and this is the time to continue focusing on green innovation, which will be more resilient than other sectors — this crisis has already proven that. If you look at funds that are investing exclusively in the green economy, they’ve been doing much better than their competitors with more diversified portfolios. In 2019, the EBRD had two major investments in wind energy: EUR 75 mn in the Lekela wind project, and we invested another USD 60 mn in equity in Infinity.

There’s also a lot of scope to improve the capabilities of economic zones like the Suez Canal Economic Zone, where there are a lot of synergies between companies. Egypt is already in a good position there and should continue to invest.

Then there’s the fintech route. We've supported a lot of Egyptian startups, including ones focused on fintech, and there’s a vibrant scene of accelerators, venture startups, and tech-enabled startups through our Star Venture program. These need to be supported throughout the crisis to ensure the recovery and also to ensure that companies have flexibility in their delivery mode.

E: How has the pandemic changed the EBRD’s approach to investment?

HH: Generally, we have changed our approach to all our countries of operation because it's a global crisis. While we are open for our regular business, and I think our regular strategic priorities for Egypt, namely green and inclusive and integrated remain valid, there is a need to respond to this crisis immediately. Our board of directors swiftly approved a large global solidarity package of an initial EUR 1 bn followed by EUR 4 bn for the 38 economies where we invest. This package will allow a much faster approval for our existing clients, with a particular focus on the private sector. In the second phase, we’re also looking at faster approval for vital infrastructure.

E: What does that mean for Egypt?

HH: We want to further support SMEs that are the backbone of the Egyptian economy to help make them resilient and to enable their recovery. What they need during this period is urgent financing, and some of it is on a very small scale, through onlending via local banks. Egyptian banks asked us for additional liquidity to help lend to the real economy, particularly smaller exporters. In response, the Bank approved USD 850 mn of support to five Egyptian banks — QNB, the National Bank of Egypt, the National Bank of Kuwait, CIB, and Banque Misr — with USD 350 mn dedicated to trade-related activities. Egypt was one of the first countries to benefit from the solidarity package financing and the scale is probably one of the largest. The loan approval happened very quickly as these banks are our existing clients.

We’re also looking at how to support other clients like the Egyptian Electricity Holding Company on vital infrastructure projects, and other ways to support the real economy. There’s also a lot of demand for EBRD support from agribusiness companies and other industries such as the construction sector which is struggling at this point in time and needs extra liquidity to make sure they don't have to resort to layoffs and to keep the lights on. This shows how things are changing — we’re starting to get a lot more demand from the real economy directly, as opposed to demand being more concentrated among banks. This could take longer because we haven’t worked with some of them and the due diligence process takes time to understand their business models; nevertheless this is an area we’re looking at.

Tap or click here to read the rest of the interview.

Egypt in the News

Exiled Egyptian LGBT activist Sarah Hegazy has died in Canada. Hegazy, one of 57 people arrested for raising a rainbow flag at a Mashrou Leila concert in Cairo in 2017, committed suicide in exile. She later served three months in prison before relocating to Canada, where she had been granted asylum. The news received considerable attention in social media and has since crossed over into the international press: Reuters | New York Times.

Worth Listening

In this week’s episode of Making It, SAP Egypt Managing Director Hoda Mansour outlines the strategy she used to achieve triple digit growth in SAP’s cloud business. From taking on government initiatives, expanding the SME customer base, and hiring non-tech industry experts, Mansour gives us a peek behind the digital services and infrastructure curtain. Making It is taking a publishing break this week and will return next week with the final episode of season two.

Tap or click here to listen to our chat with Hoda: Apple Podcast | Google Podcast | Our website | Omny. We’re also available on Spotify, but only for non-MENA accounts. Subscribe to Making It on your podcatcher of choice here.

Diplomacy + Foreign Trade

Sudan calls Ethiopia’s GERD proposal “a complete retreat from previously agreed upon principles,” according to an Irrigation Ministry statement. That said, Egypt, Sudan and Ethiopia appeared to make modest progress yesterday on technical issues; talks will continue today.

Egypt has said it would seek “other political options” including reaching out to the UN Security Council if Ethiopia remains “intransigent,” according to a Foreign Ministry statement.

In other news:

  • Germany’s KfW has inked a EUR 41.5 mn agreement to set up applied technology institutes in Hurghada and Aswan and upgrade vocational training and applied technology centers in Cairo and Alexandria, according to the local press.
  • Egypt signed on Sunday a EUR 50 mn agreement with the French Development Agency (AFD) to develop Cairo Metro’s line one, according to a Transport Ministry statement.

Real Estate + Housing

Homes at Egypt’s new capital R3 district to be delivered by end of 2020

Deliveries at the new administrative capital’s R3 residential district will be complete before the end of the year, New Administrative Capital Authority head Mohamed Abdel Maksoud said. The 1k feddan neighborhood is now 88.5% complete.

Automotive + Transportation

Careem to roll out delivery and e-wallet application Super App by end of month

Uber subsidiary Careem has launched a new app, Super App, consolidating its ride-hailing services for cars and bikes along with delivery and e-wallet services, as it looks to expand beyond ride-hailing in the region, according to a statement (pdf). The company invested USD 50 mn in the app, which will be rolled out across regional markets by the end of the month. Careem expects to finish rolling out the app this month with the aim of “bringing together people's essential, everyday services in one place, with a single sign-on and integrated payment system.”

Egypt receives third batch of General Electric locomotives

General Electric delivered 20 locomotives to Egypt yesterday, the third batch of rail engines that Egypt had purchased in 2017. GE was contracted to supply and finance 110 new locomotives and refurbish 81 at a cost of a little over USD 600 mn. Egypt is set to receive another batch of 20 locomotives later this month, the statement said.

On Your Way Out

Gov’t entrepreneurship program opens applications for new AI incubator: State-backed Rowad 2030 is now accepting applicants for a newly launched artificial intelligence startup incubator, the Planning and Economic Development Ministry said. The new incubator has branches at Alexandria and Ain Shams universities. Rowad 2030 launched by the government in 2017 as part of Egypt’s 2030 sustainable development vision. Alongside setting up incubators, the program offers state-sponsored scholarships to study entrepreneurship.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.13 | Sell 16.23
EGP / USD at CIB: Buy 16.13 | Sell 16.23
EGP / USD at NBE: Buy 16.11 | Sell 16.21

EGX30 (Monday): 10,668 (-0.6%)
Turnover: EGP 1.4 bn (84% above the 90-day average)
EGX 30 year-to-date: -23.6%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 0.6%. CIB, the index’s heaviest constituent, ended down 1.5%. EGX30’s top performing constituents were Heliopolis Housing up 3.1%, Madinet Nasr Housing up 3.1%, and Telecom Egypt 2.1%. Yesterday’s worst performing stocks were Dice down 2.1%, Ezz Steel down 1.8% and Orascom Construction down 1.7%. The market turnover was EGP 1.4 bn, and foreign investors were the sole net sellers.

Foreigners: Net Short | EGP -180.5 mn
Regional: Net Long | EGP +1.3 mn
Domestic: Net Long | EGP +179.1 mn

Retail: 41.7% of total trades | 43.8% of buyers | 39.6% of sellers
Institutions: 58.3% of total trades | 56.2% of buyers | 60.4% of sellers

WTI: USD 37.12 (+2.37%)
Brent: USD 39.88 (+2.88%)

Natural Gas (Nymex, futures prices) USD 1.67 MMBtu, (-3.58%, July 2020 contract)
Gold: USD 1,727.20 / troy ounce (-0.58%)

TASI: 7,263.65 (-0.40%) (YTD: -13.42%)
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Calendar

17 June (Wednesday): The Arab Ministerial Council for Tourism and Arab Tourism Organization meet to discuss recommendations on covid-19 relief packages.

25 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

30 June (Tuesday): Anniversary of the June 2013 protests, national holiday.

1 July (Wednesday): Official reopening of Egypt’s airspace to inbound and outbound international flights.

12 July (Sunday): North Cairo Court will hold a court session for the international arbitration case filed by Syrian Antrados against Porto Group for USD 176 mn after being pushed back from an initial 17 May court date.

28-29 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

30 July-3 August (Thursday-Monday): Eid El Adha (TBC), national holiday.

13 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

20 August (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

15-16 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

24 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

24 September- 2 October (Thursday-Friday): El Gouna Film Festival, El Gouna, Egypt.

6 October (Tuesday): Armed Forces Day, national holiday.

29 October (Thursday): Prophet Mohamed’s birthday (TBC), national holiday.

November: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

4-5 November (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

12 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

15-16 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

24 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

25 December (Friday): Western Christmas.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, national holiday.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2020 Enterprise Ventures LLC.